The NCB Services PMI fell to 48.4 last month compared with 52.7 in November – any reading below 50 signals a contraction in the sector.

New orders have fallen in seven of the past eight months.

Employment levels in firms is also continuing to fall while those who stepped down were not replaced.

NCB's chief economist Brian Devine said the only ray of hope is the export sector as the domestic market shows no sign of growth.

''The export component within new export orders remained above 50 and ultimately, like for the economy as a whole, this will be sufficient to outweigh the drag from domestic demand in 2012 to ensure a positive GDP number,'' he added.

Exchequer return figures released yesterday came in lower than the Government had expected but Finance Minister Michael Noonan said growth targets will be met.

Meanwhile, the euro lost value this morning as the debt crisis dragged on.

All eyes are on a French bond sale that will take place later today while .